Executive Orders Bolster USD/JPY, But Peso Ends up On Top in Trump/Pena Tussle

The U.S. dollar closed out the week mixed against the major currencies as financial markets debated the impact on the dollar by executive orders signed by President Trump aimed at increasing infrastructure spending, rising tensions between Trump and Mexican President Enrique Pena Nieto, and a UK high court’s decision regarding the country’s divorce from the European Union.

The Dow Jones Industrial Average finally crossed over the elusive 20,000 milestone this week, but without the corresponding gains in the USD/JPY as 114.00 resistance left the dollar wilting for most of the day. When the overseas markets finally opened, the dollar sprang to life and broke through 114.00 to trade as high as 114.60 before the trade fizzled, but still giving the dollar an impressive 1.0% gain over the yen on Thursday.

USD/JPY continued to grind higher early on Friday, but found the upside blocked just above 115.00, and on an unexpected miss on fourth quarter U.S. GDP. Despite a lackluster performance in equity markets, the dollar pulled off a solid 0.50% gain and ended the week 0.4% higher.

EUR/USD closed out the week lower for the first time in six weeks down by just 0.02%. Early weakness tied to a miss on the German Ifo index dissipated later in the week but wasn’t enough to offset Thursday’s heavy losses for the joint currency that drove EUR/USD down to pivotal support at 1.0663, the 23% retracement of the move between the May 3 high of 1.1623 and Dec 15 low of 1.0366.

USD/MXN was in the red for the first time in seven weeks, largely a result of tensions between the U.S. and Mexican presidents. Trump said Mexico would pay for a border wall, Pena Nieto said it wouldn’t and canceled his meeting with Trump in retaliation, subsequently driving USD/MXN to its lowest level in three weeks and leaving the dollar more than 3% lower from last Friday’s close.

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